The Canada Emergency Business Account (CEBA) offers partially forgivable, interest-free loans to small businesses that have experienced a decrease in revenue due to the Covid-19 pandemic. The amount of the loan is up to $40,000 and is provided to businesses to cover ongoing costs such as rent, insurance, utilities, taxes and employment expenditures.

If the balance of the loan is repaid on or before December 31, 2022 then 25% of the loan (up to $10,000) will be forgiven.

The current update allows new businesses, businesses which rely on contractors and family-owned businesses which might pay employees through dividends to apply for the program.

Expanded Eligibility Criteria

  • The applicant is a Canadian operating business in operation as of March 1, 2020.
  • The applicant has a federal tax registration number.
  • The applicants total employment income paid in 2019 was between $20,000 and $1,500,000.
  • For applicants with $20,000 or less in total employment income paid in 2019:
  1. The applicant has a Canada Revenue Agency (CRA) business number and has filed a 2018 or 2019 tax return.
  2. The applicant has eligible non-deferrable expenses between $40,000 and $1,500,000. Eligible non-deferrable expenses can include costs such as rent, property taxes, utilities, and insurance. These expenses will be subject to verification and audit by the Government of Canada.
  • The applicant has an active business account with the Lender, which is its primary financial institution. This account was opened on or before March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020.
  • The applicant has not previously used the Program and will not apply for support under the Program at any other financial institution.
  • The applicant acknowledges its intention to continue to operate its business or to resume operations.
  • The applicant agrees to participate in post-funding surveys conducted by the Government of Canada or any of its agents.

Businesses Excluded from the Program

The following businesses or organizations are not eligible for CEBA.

  • Government organizations or bodies, or an entity wholly owned by a government organization or body.
  • Non-profit organizations, registered charity’s, unions, or a fraternal benefit society or order, or an entity owned by such an organization, unless the entity is actively carrying on a business in Canada (including a related business in the case of a registered charity) that earns revenue from the regular supply of property/goods or services.
  • An entity owned by any Federal Member of Parliament or Senator.
  • Any business or organization that promotes violence, incites hatred or discriminates on the basis of sex, gender identity or expression, sexual orientation, colour, race, ethnic or national origin, religion, age, or mental or physical disability, contrary to applicable laws.

What are Eligible Non-Deferrable Expenses

These fall into the following categories.

  • Wages and other employment expenses to independent (arm’s length) third parties.
  • Rent or lease payments for real estate used for business purposes.
  • Rent or lease payments for capital equipment used for business purposes.
  • Payments incurred for insurance related costs.
  • Payments incurred for property taxes.
  • Payments incurred for business purposes for telephone and utilities in the form of gas, oil, electricity, water and internet.
  • Payments for regularly scheduled debt service.
  • Payments incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct business by the applicant.

Applying for CEBA

Eligible small businesses can contact their primary financial institutions in order to apply for these loans.

Information for the Application

The following information will be required to complete the application.

  1. The name of the financial institution where you submitted your application.
  2. Your 9-digit business number (the same number you used in your application with your financial institution).
  3. Electronic or paper copies of Receipts / Invoices / Agreements to be uploaded as evidence of your Eligible Non-Deferrable Expenses for the year 2020.

Important Points

  • It seems that if a business has eligible non-deferrable expenses of more than $1,500,000 then they are not a small business and are not eligible for the program. This is not specifically stated anywhere but the program is intended for small businesses.
  • The program was supposed to open on June 19, 2020. There has been a slight delay in the roll out so that it can launch properly across more than 230 financial institutions.

The team at Syed A. Raza Professional Corporation is available to answer any questions you may have about your CEBA application. Contact to schedule a free consultation.